"I've spoken to four from three different battalions and there is a grievance there that needs to be addressed," he said.

"You've got soldiers that have been seriously wounded, they have been mentally, if you like, disturbed, physically injured, in a lot of discomfort and pain, and whilst they're trying to rehabilitate, they have been disadvantaged in relation to their mates who are still serving during that tour of duty."

Mr von Berg is with the South Australian Veterans Affairs Advisory Council, which is pushing for the discrepancy to be scrapped.

The campaign is backed by the South Australian Treasurer and Veterans Affairs Minister Jack Snelling.

Mr von Berg says the rules only affect a small number of soldiers, but for them it is a lot of money, as much as $15,000 to $20,000 for an individual.

"The real issue here is that once a battalion or part battalion or an operational group is deployed, there's a budget that is set," he said.

"It's not as if there are any savings for the Government whatsoever, there are no savings for the Government because those tax concessions or that annual leave entitlement is, if you like, taken away.

"Basically it's what I would call a fairness test. A soldier has been wounded doing his or her duty, why should they be penalised for being wounded? It's a moral issue."

The Defence Department says hospital care is classed differently to outpatient or rehabilitation treatment because of tax laws.

In a statement to AM, it added: "Defence Personnel remains engaged with the Australian Tax Office in all matters relating to the tax treatment of Australian Defence Force personnel, especially those who are wounded in action."

The Department says the Minister for Defence Science and Personnel Warren Snowdon stands by the policy.

The Minister's office was asked to explain the difference in entitlements, but the ABC has not received a response.